Now You Can Give the SEC Your “Two Cents” On Climate Disclosures

The Chair of the Securities and Exchange Commission wants to know what you want to know about how corporations are dealing with climate change and other environmental risks.  In a speech yesterday to the liberal think tank the Center for American Progress, she explained specifically what the Commission, which oversees corporate transparency and accountability for shareholders and the public, wants the public to weigh in on, including:

  • what climate and environmental performance and risk data and metrics are most useful and cut across industries,
  • to what extent should the Commission have an industry-specific approach,
  • what can we learn from existing voluntary reporting frameworks that companies already use,
  • how does the Commission make a climate change disclosure regime that is sufficiently flexible to keep up with the latest market and scientific developments, and
  • how should the Commission address the significant gap between what would be required of public versus privately held companies?

Why This Matters:  The Commission’s position represents a huge shift and a wholesale rejection of the outdated thinking that we must choose between a clean environment and a strong economy.  As the Acting Chair Allison Herren Lee said, “it’s time to move from the question of  ‘if’ to the more difficult question of ‘how’ we obtain disclosure on climate.” 

One Standard?

Herren Lee said the public is demanding the additional information — and that as that demand increased, it gave rise to more questions about whether current climate change disclosures provide sufficient information for investors and the public to use their power in the commercial and financial markets to drive change.  She explained that the Commission really needs the public’s input so that it can best “regulate, monitor, review and guide climate change disclosures in order to provide more consistent, comparable and reliable information for investors while also providing greater clarity to registrants as to what is expected of them.”

Beyond Climate

Chair Herren Lee also emphasized that the improved disclosures they are seeking go beyond climate change.  Climate is a unique issue because of the potentially systemic (i.e. existential) risks it poses.  But she also wants to hear from the public about the broader array of ESG (or environment, sustainability, and governance) disclosure issues. She said, “we must also make progress on standardized ESG disclosure more broadly. That means working toward a comprehensive ESG disclosure framework,” and she specifically referenced COVID and worker safety, as well as racial justice.

The Money Quote

In repudiating the false choice of environment versus the economy, Herren Lee said “for a long time so-called impact or socially-responsible investing was perceived or characterized as a niche personal interest – the pursuit of ideals unconnected to financial or investment fundamentals, or even at odds with maximizing portfolio performance.  That supposed distinction—between what’s ‘good’ and what’s profitable, between what’s sustainable environmentally and what’s sustainable economically, between acting in pursuit of the public interest and acting to maximize the bottom line—is increasingly diminished.”

What You Can Do:  Provide comments!  Here is the full request for information. Click here to comment online and if you want to meet with someone to discuss your comments, you can contact Kristina Wyatt, Senior Special Counsel, at (202) 551-3181.

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